Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 30

Consider the two mutually exclusive investment projects in Table 1, which have unequal service lives.
Table 1
(a) What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives
(b) With the assumption(s) defined in part (a) and using 10%, determine which project should be selected.
(c) If your analysis period (study period) is just three years, what should be the salvage value of project A2 at the end of year 3 lo make the two alternatives economically indifferent